Sidney and Gertrude own 40% of Bearcave Bookstore, an S corporation. The remaining 60% is owned by their son Boris. Sidney and Gertrude do not participate in operating or managing the store, and they invested $19,000 in the business when it opened in 2007. The bookstore reported the following net income (loss) for the years 2007 through 2010:
|
2007
|
2008
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2009
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2010
|
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$(24,000)
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$(14,000)
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$(12,000)
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$5,000
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- How much do Sidney and Gertrude have at risk in Bearcave at the end of each year (2007-2010)?
- What amount can they recognize as income or loss from Bearcave for each year (2007-2010)?
- Assume that Sidney and Gertrude materially participate in Bearcave for each year (2007-2010). What amount can they recognize as income or loss from Bearcave for each year (2007-2010)?